All Forum Posts by: Benjamin Vail

@Aaron Bihl the 75/25 offer at 5.9% was from Host Financial. Have not yet gotten a quote from RNC. It sounds likeHost Financial would also do rehab loans. My next project is a purchase. I was actually able to find a slightly better loan from my conventional lender (80/20 at 5.6%). For this purchase. But I am going to keep looking at Host Financial for a re-if, and as a last resort lender before hard money. 

@Aaron Bihl yes I have been in discussions with Host Financial, and they are one of the exciting options I see emerging in the lending market. The other is RNC Capitol. The key I am finding here is that they will count the Airbnb revenue (or projected revenue) as income towards Debt service, but the appraisal does not consider the STR revenue. So you can't get a higher value based on the revenue you are making, but They did offer me a 75/25 loan at %5.9 (not great) for a purchase loan. Being self-employed (and a maxed out DTI) they were counting the Airbnb revenue (projected) towards the new debt service amount of the loan. If you can get a traditional 80/20 investment loan, that will likely still be a better option. But the Host Financial product seems like a great last resort.

- The Future of Airbnb investing has arrived! Cheers @Eric P.

 It does work. It has worked for me. I have done it three times, and I am in purchasing it to do it a fourth time now.  Yes, as most of you have stated, traditionally banks have issues with refinancing the house that does not have a lease and is only making revenue on Airbnb. However, this is 2019! I now have at least two banks that will work with Airbnb hosts, and will take Airbnb income towards the debt ratio! 

Purchased a house for $45,000 cash. Put it on Airbnb, and put minor repairs ($5,000) in. Waited 8 months, re-financed, cashed out $38,000 and moved that capitol on to another project. That Airbnb house now makes about $1800/month (with a $340/month PITI payment, and $250 in utilities and cap ex.) which leaves about $1200 profit each month for my $12,000 I still have invested in that house. 100% ROI is good!

@Account Closed good post! There are a few other strategies for lowering start up costs that you did not mention. 

RENTAL FURNITURE! 

I mean if your business already does rental arbitrage with landlords properties, why not do it with a big companies furniture also? My company runs 32 Units in Airbnb. Some of the houses we started them off by renting an entire house of furniture for about $300/month. We did buy dishes and towels ($500), but rented most everything else. Our profit went from $1500/month down to $1200/month on most of the units we rent furniture at, but so much less $$ up front, so that the ROI is WAY better!

Then over a period of the next couple months, if the unit is doing well, we start to buy pieces that will go well in that house. After about 3 months, we pick a couple days, and block the calendar. We call the rental company to come and return the rental furniture, and fill it will purchased item. 

You can get much better stuff at better deals when you spread out the purchasing period over 3 months. Also, you can just save your profits from the first couple months, and use that cash for the furniture. 

We like to get some guest feedback from each house, and use that information to determine a theme, and inform the design process as we further develop the space. If we get a lot of negative feedback, then maybe we would consider not further developing that peticular space, and just ride out the current lease before moving on. 

That was a free one, but just one of the many strategies we use in our STR business. Good Luck!

On AirDNA, you can find all the data you need to see if the market is over saturated. In my market, the number of Airbnb rentals has gone from 400 to 1400 in one year. (So you might think saturation). But the ADR has also INCREASED over that time from $126 to $134. So actually demand still seems to be out pacing supply still. 

I also agree with what has been said about regulations. If they have not yet made some, they will soon. Just always have a back up plan if you get shut down. 

Good luck! 

Hey @Matt P. I think the average is about 62% across the city. If you want a high occupancy rate, we could easily be in the 90% range here in Columbus (with lower prices). However or team has changed our pricing strategy to optimize for total revenue, and 75% occupancy is actually where we want to be to achieve optimal monthly revenue. Our houses were in the 85% range last year, and now we are consistently around 75% occupancy. Columbus is one of the best STR cities in the US, especially now that the city passed STR friendly laws. We are one of the largest STR management companies in the area, and we would be happy to help you get started If you are interested.

@Steve Vaughan The guest pays a cleaning fee, that we pay our cleaning crew. The 25% is based on the revenue after cleaning fees, and includes laundry, re-stocking and all other activities needed. We also have a 24/7 guest services team! 

I own a management company, and we charge 20% - 25%. We make more money for our clients than we charge them. Meaning most our clients saw an overall 25% + spike in revenue after we started to manage their unit. That is why we are busier than we can handle. last year we were managing 6 units, now we are managing 34 units. When a professional is running the pricing, the schedule, and the guest services, you would be shocked to see how much 1 unit can actually make. All of the part time, or one-off STR owners just don't have the same experience to achieve actually optimized STR results. I have hosted 1500 check-ins on my Airbnb account in the last 3 years, and have learned a lot. I can't wait to see what I can learn on the next 1500 check-ins!

You just need to buy 1 critical item. 1 (honest, hard working) pair of boots on the ground. This pair of boots needs to be paid well, and share your vision, and passion. Then most all of your problems can be solved! 

@Kevin Lefeuvre yes, in the cities that have made laws against non-owner-occupied listings, there are bad actors just doing it anyway until they get caught. This article just discusses the one, but many will come to light soon. 

I believe the key to scaling in this business is to be present in different geographic regions where what you do is LEGAL! That is not hard. Just look up your local laws, abide by them, and advocate for them. 

Your friend in LA, and all the others in LA, SF, NY, ect. will all get caught eventually. 

@Llewelyn A. My point is that they article does not explicitly state that the law this Airbnb host is breaking is explicit to NYC (and now a few other select cities). It makes it seem like the law he was breaking is universal to all locations Airbnb is in. 

I do feel that this guy is a criminal.